Dow Takeover Almost Complete

After an operatic, months-long battle of wills with the wealthy Bancroft family, which has controlled the business news empire for more than a century, Murdoch's hefty $60-per-share offer finally prevailed on Tuesday. Ultimately, an agreement to pay the family's advisory fees trumped fears that Murdoch might corrupt their birthright, one of the most respected and powerful news organizations in the world.

The victory of Murdoch's News Corp. marries the staid, establishment publisher of The Wall Street Journal with a global media maverick and his company best known as purveyor of newspapers such as The New York Post and television shows such as "The O'Reilly Factor" and "The Simpsons."

That coupling has sent chills through the world of establishment journalism and raised anew a question that has bedeviled the industry in recent years as audience and advertising revenue decline: Why can't even the best newspapers find a way to pay for themselves?

Murdoch appears to have come to the same conclusion about "old media" as Chicago billionaire Sam Zell, who agreed in April to help fund a transaction to take private Tribune Co., the owner of the Chicago Tribune and the Daily Press, in an $8.2 billion deal involving an employee stock ownership trust.

Both tycoons are confident that with more aggressive management focused on transforming these companies for the digital future, they can wring out better performance and make their investment pay off.

At issue is whether they can do so and still produce high-quality journalism.

"An owner who loves the product and is willing to roll up his sleeves -- I think that could be exciting," said Norman Pearlstine, former editor of The Wall Street Journal and Time Inc. and now a senior adviser to the Carlyle Group, a Washington-based private equity firm. "The question is: Does respect (for the product's credibility) go along with that?"

As much as Bancroft family members voiced their worries about Murdoch's aims since he made his offer earlier this year, his initial strategy of appealing to their profit motive ultimately won the day.

Although the family was deeply divided among those who considered Murdoch dangerous for the Journal's integrity and those who simply wanted him to pay more money, the latter side became the majority when Murdoch agreed to cover an estimated $30 million in fees from the family's lawyers and investment bankers.

Now, pending expected approval of the deal by shareholder vote, most observers agree Murdoch is likely to move boldly and decisively to transform Dow Jones.

Paul Tash, editor of Florida's St. Petersburg Times and board chairman of the nonprofit Poynter Institute, a journalism think tank, said he is wary of Murdoch's record of editorial intervention. But he also noted that Murdoch's history suggests "he will try to build Dow Jones and the Wall Street Journal rather than use it to harvest profits in a period of decline. That's not his style." Murdoch's currying favor with Chinese officials is a widely cited example of his meddling.

But none of that would matter if his media offerings weren't effective in the marketplace, especially at a time when others are floundering. While he is best known for going down-market or stirring controversy to attract readers and viewers, media observers also admit he is able to stand out from the media clutter through the razor sharp focus of his products. *